Gross profit, as a percentage of net sales was 74.2%, compared to 66.9%

Research and development expenses increased 45.3% to $34.3 million

Selling, marketing, general and administrative expenses, which
included $11.3 million litigation provisions in 2012, increased $4.2
million

Operating income increased to $265.4 million, or 52.5% of net sales,
compared to $170.6 million, or 42.9% of net sales

Income tax expense increased $33.5 million from $18.2 million to $51.7
million

Net income attributable to Taro was $217.0 million compared to $157.0
million, a $60.0 million increase, resulting in diluted earnings per
share of $4.86 compared to $3.52.

Cash Flow and Balance Sheet Highlights

Cash flow provided by operations for the nine months ended December
31, 2012, as compared to December 31, 2011,was $173.1 million
compared to $157.0 million, primarily due to the payment of income
taxes as reflected in the significant decrease in trade and other
payables

Cash, including marketable securities, increased $152.2 million to
$486.6 million from March 31, 2012.

FDA Approvals and Filings

During the quarter, the Company filed one ANDA with the FDA. With this,
ANDAs representing seventeen products as well as two NDAs await FDA
approval.

About Taro

Taro Pharmaceutical Industries Ltd. is a multinational, science-based
pharmaceutical company, dedicated to meeting the needs of its customers
through the discovery, development, manufacturing and marketing of the
highest quality healthcare products. For further information on Taro
Pharmaceutical Industries Ltd., please visit the Company’s website at www.taro.com.

SAFE HARBOR STATEMENT

The unaudited consolidated financial statements have been prepared on
the same basis as the annual consolidated financial statements and, in
the opinion of management, reflect all adjustments necessary to present
fairly the financial condition and results of operations of the Company.The unaudited consolidated financial statements should be read in
conjunction with the Company’s audited consolidated financial statements
included in the Company’s Annual Report on Form 20-F, as filed with the
SEC.

Certain statements in this release are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of
1995.These statements include, but are not limited to,
statements that do not describe historical facts and statements that
refer or relate to events or circumstances the Company “estimates,”
“believes,” or “expects” to happen or similar language, and statements
with respect to the Company’s financial performance, availability of
financial information, and estimates of financial results and financial
information for fiscal year 2013.Although the Company believes
the expectations reflected in such forward-looking statements to be
based on reasonable assumptions, it can give no assurances that its
expectations will be attained.Factors that could cause actual
results to differ include actions of the Company's lenders and
creditors, general domestic and international economic conditions,
industry and market conditions, changes in the Company's financial
position, litigation brought by any party in any court in Israel, the
United States, or any country in which Taro operates, regulatory and
legislative actions in the countries in which Taro operates, and other
risks detailed from time to time in the Company’s SEC reports, including
its Annual Reports on Form 20-F.Forward-looking statements are
applicable only as of the date on which they are made.The
Company undertakes no obligations to update, change or revise any
forward-looking statement, whether as a result of new information,
additional or subsequent developments or otherwise.

**Financial Tables Follow**

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(U.S. dollars in thousands, except share data)

Quarter Ended

December 31,

Year to Date

December 31,

2012

2011

2012

2011

Sales, net

$

185,695

$

148,105

$

505,821

$

397,941

Cost of sales

45,769

42,056

130,470

131,526

Gross Profit

139,926

106,049

375,351

266,415

Operating Expenses:

Research and development, net

11,838

8,867

34,306

23,609

Selling, marketing, general and administrative

24,053

21,930

75,612

71,458

Impairment

-

784

-

784

Operating income

104,035

74,468

265,433

170,564

Financial Expenses, net:

Interest and other financial (income) expenses, net

(581

)

315

(440

)

2,445

Foreign exchange (income) expense

(1,992

)

6,312

(1,736

)

(7,329

)

Other income (loss), net

1,359

(565

)

1,952

358

Income before income taxes

107,967

67,276

269,561

175,806

Tax expense

18,779

4,584

51,713

18,183

Income from continuing operations

89,188

62,692

217,848

157,623

Net loss from discontinued operations

(37

)

(344

)

(44

)

(298

)

Net income

89,151

62,348

217,804

157,325

Net income (loss) attributable to non-controlling interest

374

(52

)

765

303

Net income attributable to Taro

$

88,777

$

62,400

$

217,039

$

157,022

Net income per ordinary share from continuing

operations attributable to Taro:

Basic

$

1.98

$

1.41

$

4.86

$

3.53

Diluted

$

1.98

$

1.41

$

4.86

$

3.53

Net loss per ordinary share from discontinued

operations attributable to Taro:

Basic

($0.00)*

($0.01)

($0.00)*

($0.01)

Diluted

($0.00)*

($0.01)

($0.00)*

($0.01)

Net income per ordinary share attributable to Taro:

Basic

$

1.98

$

1.40

$

4.86

$

3.53

Diluted

$

1.98

$

1.40

$

4.86

$

3.52

Weighted-average number of shares used to compute

net income per share:

Basic

44,725,898

44,474,727

44,651,534

44,527,689

Diluted

44,740,427

44,550,022

44,699,715

44,587,620

* Amount is less than $0.01.May not foot due to rounding.

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

(U.S. dollars in thousands)

December 31,

March 31,

2012

2012

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

276,995

$

238,266

Short-term bank deposits

198,973

72,440

Restricted short-term bank deposits

7,430

15,780

Marketable securities

3,172

7,835

Accounts receivable and other:

Trade, net

134,590

111,130

Other receivables and prepaid expenses

109,711

98,501

Inventories

110,732

109,638

Long-term assets held for sale, net

69

71

TOTAL CURRENT ASSETS

841,672

653,661

Long-term receivables and other assets

27,929

19,972

Property, plant and equipment, net

145,762

150,750

Other assets

29,945

32,041

TOTAL ASSETS

$

1,045,308

$

856,424

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Current maturities of long-term debt

$

11,086

$

10,957

Trade payables and other current liabilities

162,756

187,942

TOTAL CURRENT LIABILITIES

173,842

198,899

Long-term debt, net of current maturities

17,244

27,949

Deferred taxes and other long-term liabilities

6,116

6,618

TOTAL LIABILITIES

197,202

233,466

Taro shareholders’ equity

843,391

619,008

Non-controlling interest

4,715

3,950

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,045,308

$

856,424

TARO PHARMACEUTICAL INDUSTRIES LTD.

SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(U.S. dollars in thousands)

Nine Months Ended December 31,

2012

2011

Operating Activities:

Net income

$

217,804

$

157,325

Adjustments required to reconcile net income to net cash

provided by operating activities:

Depreciation and amortization

13,493

14,021

Impairment of long-lived assets

-

784

Share-based compensation expense

8

39

Loss on sale of long-lived assets and marketable securities, net

106

571

Decrease in long-term debt due to currency fluctuations

(23

)

(2,971

)

Increase in trade receivables, net

(23,417

)

(39,295

)

Change in derivative instruments, net

1,048

6,070

Increase in other receivables, prepaid expenses and other assets

(10,622

)

(23,544

)

Increase in inventories, net

(1,021

)

(22,872

)

Effect of exchange differences on inter-company balances

367

(2,881

)

(Decrease) increase in trade and other payables and liabilities

(24,647

)

69,802

Net cash provided by operating activities

173,096

157,049

Investing Activities:

Purchase of property, plant & equipment

(6,183

)

(5,406

)

Investment in other intangible assets

(765

)

-

(Investment in) proceeds from long-term security deposits and other
assets

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